Euro entry to get harder for wavering EU states, Santos Silva says

Eight of the 27 EU nations -- not counting the UK, which is negotiating its departure -- are outside the eurozone and are mostly opposed to the idea of ditching their national currencies for now.

30.08.2017

(Bloomberg) European Union members that are reluctant to adopt the euro now may find it more difficult to join the currency union in the future if it deepens integration as planned, Portuguese Foreign Minister Augusto Santos Silva said.

The EU is already building closer ties on several layers and the so-called multi-speed process offers the advantage for members to decide where they want to participate, Santos Silva said in an interview in Bloomberg’s Prague office on Monday.

The potential pitfall is that as euro nations prepare to further unify their economic policies, countries with their own currencies may find themselves on the slow track and require more effort if they decide to join later, he said.

"There is already a core in the process of European integration, and its name is the eurozone," Santos Silva
said. Joining later would be "not as easy, but it has to remain possible" for countries with their own currencies such as the Czech Republic or Poland. "If you are not following the path of integration it is more and more difficult to return to the integration momentum," he said.

Eight of the 27 EU nations -- not counting the UK, which is negotiating its departure -- are outside the eurozone and are mostly opposed to the idea of ditching their national currencies for now. Of the post-communist members, only Bulgaria is openly pushing for fast euro adoption, with the biggest economies like Poland and the Czech Republic refusing to set target dates even as their EU accession treaty includes an obligation to transfer monetary policies to the European Central Bank at some point in the future.

Discussions over how to reboot the euro have intensified following the election of French President Emmanuel Macron, a staunch advocate of further integration. While the 19 members have yet to find a consensus on issues like if and how the euro area should get its own finance minister, budget or a regional monetary fund, talks are expected to accelerate after the German election in September.

Currently five countries from the former eastern bloc -- Slovakia, Slovenia, Estonia, Lithuania and Latvia -- use the same currency as France and Germany.

The Czech Republic, the richest of the ex-communist members in terms of economic output per capita, is refusing to make concrete steps toward euro adoption given the prevailing eurosceptic sentiment in the nation. The ruling party in Poland doesn’t expect the region’s biggest economy to make the currency switch for the next 10 or 20 years.

"If you are seeing some of your partners creating among them closer and closer relations and if you don’t want to accompany this process, of course you are going to be farther and farther away, this is pure logic," Santos Silva said. "So you have to decide what you want."